In a response to Cardi B’s query on whether crypto will replace the dollar, Twitter’s Jack Dorsey replied “Yes, Bitcoin will.” While Bitcoin has enjoyed a renaissance in 2021, there are still problems that the cryptocurrency must face before any such predictions can be made. One fintech CEO believes the greatest of which resides in the custody realm.
“Dorsey’s prediction may well run into a few problems. The first being that total Bitcoins are capped at 21 million, and, of that number, a fair amount have been lost forever. The second problem is that you’re talking about an asset which is mostly controlled by only a handful of whales. Both of those become problems when you’re theorizing that Bitcoin could usurp the place of the dollar as currency. Even Elon Musk alluded to these issues with Bitcoin in a recent exchange. But, beyond that, right now, there’s a custody issue that most people haven’t fully considered. Until we figure out custody, digital assets will not reach their full potential,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“Functionally, what happens to your digital assets after you buy them? Most investors don’t fully understand this piece. There’s the possibility for self-custody, which can be a challenge for investors without a great deal of technological understanding. It leads to lost assets. Not through malfeasance, but through simple incompetence. We’ve all heard the stories about the folks who stored their Bitcoin on a flash drive and, over the years, have thrown it away or lost it. Beyond self-custody, there is the option to leave them in your exchange or move them to a custodian. Institutional investors, and even most exchanges use some form of custody vendor. However the options on the table at the current time are not suitable for the kind of scope to which Dorsey alludes,” said Gardner.
“Consider that one of the leading providers of custody has been embroiled in a lawsuit which alleges that they are responsible for the loss of $70 million in digital assets. Imagine, if you will, that your city or provincial government simply lost $70 million. Can you imagine that? It is not acceptable. In order for digital assets to expand to take on a greater role in the financial world, the industry must solve its custody conundrum,” noted Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“I think that we’re likely to see custody addressed in 2022. One way or the other, as in the Jack Nicholson movie, something’s gotta give. In order for digital assets to truly expand and be more widely viable, firms with a security mindset must step up and provide a custody option which is safe and secure from both malfeasance and incompetence. Right now, that is lacking,” noted Gardner.
Bitcoin Hits $63,968 in Wild Crypto Market Rally Fueled by ETF Demand
Bitcoin surged to $63,968 as demand from US exchange-traded funds (ETFs) ignited a fervor among investors and traders alike to propel Bitcoin to its highest level since November 2021.
The heart of this meteoric rise lies in the fundamental economic principle of supply and demand.
With the introduction of new US ETFs dedicated to Bitcoin, the appetite for the digital asset has skyrocketed, outpacing the willingness of long-time holders to part ways with their holdings.
This dynamic imbalance has triggered a cascade of buying pressure, sending shockwaves across the crypto market.
This latest rally adds to Bitcoin’s already impressive performance, with the digital currency having surged over 40% since the advent of the US ETFs earlier in the year.
The influx of approximately $7 billion in net inflows into these funds, spearheaded by industry giants like BlackRock Inc. and Fidelity Investments, signals a seismic shift in mainstream acceptance of cryptocurrencies as legitimate investment vehicles.
Moreover, anticipation surrounding Bitcoin’s upcoming halving event, which will reduce its supply growth, has further fueled optimism among investors.
While debates persist regarding the event’s true impact on price dynamics, industry experts remain bullish on Bitcoin’s trajectory.
As Bitcoin eclipses previous highs and charts a course towards uncharted territory, observers caution against the inherent volatility and potential for sharp corrections.
Nevertheless, the allure of Bitcoin as a lucrative investment avenue continues to captivate the imagination of investors worldwide, ushering in a new era of financial innovation and speculation in the digital age.
Bitcoin Hits $57,000, Driven by Institutional Investments and ETF Surge
Bitcoin surged past the $57,000 price level to reach levels last seen in late 2021.
This rally has been largely fueled by increased institutional investments and a surge in demand for Bitcoin exchange-traded funds (ETFs).
Bitcoin’s price skyrocketed by as much as 4.4% to peak at $57,039 before slightly retreating to $56,085 on Tuesday as of 6 a.m. Nigerian time.
This surge represents a 32% increase since the beginning of the year, extending a prolonged rally that has also buoyed other cryptocurrencies like Ether and Dogecoin.
A significant catalyst behind this surge has been the influx of approximately $6.1 billion into a series of Bitcoin ETFs that commenced trading in the United States on January 11.
These ETFs have signaled a broadening demand for Bitcoin beyond the traditional circle of digital asset enthusiasts.
MicroStrategy Inc., a prominent enterprise software firm known for its bullish stance on Bitcoin, announced that it had acquired an additional 3,000 Bitcoins this month, bringing its total Bitcoin holdings to around $10 billion.
This move underscores the growing trend of corporations adopting Bitcoin as part of their treasury reserve strategies.
The overall value of digital assets now stands at approximately $2.2 trillion, as per CoinGecko data, a significant recovery from the lows experienced during the bear market of 2022.
Despite concerns over rising US Treasury yields, Bitcoin’s bullish momentum remains robust, buoyed by favorable sentiment and increasing institutional adoption.
The surge in Bitcoin’s price has also propelled shares of crypto-related companies in the US, including MicroStrategy, Coinbase Global Inc., and Marathon Digital Holdings Inc., which all saw notable gains on Monday.
This positive sentiment has also spilled over into Asian stocks related to digital assets, indicating a broader global appetite for cryptocurrencies amidst a shifting financial landscape.
Bitcoin Giant MicroStrategy Hit by X Account Hack, Users Lose Funds in Phishing Scheme
MicroStrategy Inc., renowned for its significant Bitcoin holdings, faced a security breach when its X account fell victim to a phishing scheme, leading unsuspecting users to lose funds.
The incident unfolded on Monday in Asia as an unidentified attacker posted a now-deleted message on the company’s X page, enticing users with a purported promotion for a new coin supposedly backed by MicroStrategy.
Upon clicking the link, users were redirected to a fraudulent website, resulting in approximately $440,000 being stolen from individuals who were deceived by the scam.
Crypto security analysts, including firms like PeckShield and independent investigators like ZachXBT, promptly raised alarms about the compromise of MicroStrategy’s X account.
MicroStrategy, headquartered in Tysons Corner, Virginia, did not immediately respond to inquiries regarding the security breach.
The company’s co-founder, Michael Saylor, has been a vocal advocate for Bitcoin, leading the firm to allocate a substantial portion of its cash reserves into the digital asset, now valued at roughly $10 billion.
The incident underscores the persistent challenges faced by cryptocurrency platforms in safeguarding user accounts against sophisticated cyber threats.
As investigations continue, the broader crypto community remains vigilant against similar phishing exploits, emphasizing the importance of robust security measures in the digital asset ecosystem.
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